Overcollateralized borrowers deposit funds into Sky and receive DAI stablecoin.

Sky is a non-custodial stablecoin protocol built on Ethereum. Sky (previously MakerDAO) was founded by Rune Christensen and launched in 2015.

SKY tokenholders own and govern the protocol. They currently take all of the total interest and PSM fees paid by borrowers (revenue). Sky’s investors include a16z, Polychain, IOSG Ventures, etc.

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Sky | Fees and revenues breakdown

# Sky Expenses Methodology

## 1. Overview

Sky expenses represents the total daily operational costs incurred by the Sky protocol (formerly MakerDAO), measured in USD. This metric combines operating expenses and token incentives to provide a comprehensive view of protocol expenditures. The calculation aggregates various expense categories including workforce payments, oracle costs, liquidation losses, DAI savings rate payments, and other operational costs, then converts them to USD values for standardized reporting.

## 2. Data sources

The calculation utilizes multiple types of blockchain and external data:

- **Ethereum contract function calls**: DAI minting and burning functions (`Dai_mint_function`, `Dai_burn_function`), internal Sky accounting functions (`Vat_move_function`, `Vat_suck_function`)
- **Contract events**: System configuration events (`ChainLog_UpdateAddress_event`), liquidation events (`Dog_Bark_event`, `Cat_Bite_event`), RWA payment events (various JAR Toss events)
- **Token transfer logs**: Ethereum ERC20 transfer events for MKR token payments from Sky accounts to external parties
- **Sky protocol state data**: Vault collateral and debt positions, ilk (collateral type) configurations, liquidation auction data
- **End-of-day price feeds**: Token prices for USD conversion, with DAI defaulting to $1.00 for historical periods
- **Account classification data**: Sky team wallet addresses, system contract addresses, excluded accounts for proper expense categorization

## 3. Step-by-step calculation

### Component A: Direct DAI expenses
- **Purpose**: Captures DAI minted directly from the Sky balance sheet for operational expenses
- **Logic**: Identifies DAI mint transactions where the balance sheet (`0xa950524441892a31ebddf91d3ceefa04bf454466`) mints DAI to Sky team accounts. Filters for transactions where DAI flows from the balance sheet to direct expense accounts (Sky team wallets, oracle accounts, etc.). Classifies expenses by destination account type: workforce payments to DAO accounts, oracle costs to gas management accounts, and other operational expenses to system accounts.
- **Key fields**: `amount` (DAI minted divided by 1e18), `dai_destination_address` for account classification, `expense_type` based on receiving account

### Component B: DAI savings rate expenses  
- **Purpose**: Tracks DAI allocated to pay interest on DAI savings rate deposits
- **Logic**: Identifies DAI transfers from the Sky balance sheet to the DAI savings rate contract (`0x197e90f9fad81970ba7976f33cbd77088e5d7cf7`). Uses system DAI flow events to capture internal accounting transfers where DAI is allocated for savings rate payments.
- **Key fields**: `amount` (DAI transferred), expense categorized as "DAI savings rate"

### Component C: Direct MKR expenses
- **Purpose**: Captures MKR token payments made directly by Sky for operational costs
- **Logic**: Tracks MKR token transfers from Sky direct expense accounts to external parties. Excludes transfers between Sky accounts to avoid double-counting. Converts MKR amounts using token decimals (18) and applies USD pricing.
- **Key fields**: `value` (MKR transferred divided by 1e18), `token_address` (MKR contract), expense categorized as "Other direct (MKR)"

### Component D: Returned workforce payments
- **Purpose**: Accounts for DAI returned by Sky teams, recorded as negative expenses
- **Logic**: Identifies DAI burn transactions where Sky team accounts or the balance sheet input account burn DAI. These represent unused funds returned to the protocol treasury. Filters for burns from DAO accounts and specific operational accounts.
- **Key fields**: `amount` (DAI burned, recorded as negative), transaction filtered by burning account address

### Component E: Liquidation expenses
- **Purpose**: Calculates net losses from liquidations and related expenses
- **Logic**: Combines seized liquidations (collateral taken by the system) and settled liquidations (debt pushed to auction). Seized liquidations are positive (system gains), settled liquidations are negative (system losses). Only includes net daily losses (where total is negative). Also includes other liquidation-related DAI mints that don't fit other categories.
- **Key fields**: `amount` (net liquidation result), collateral type from ilk classification, filtered to loss days only

### Component F: Token incentives
- **Purpose**: Tracks token-based rewards paid to users (set to zero for Sky)
- **Logic**: Sky protocol does not currently distribute token incentives, so this component returns zero values for all time periods. Uses the same time series structure as other metrics for consistency.
- **Key fields**: `token_incentives` (always 0)

### Final aggregation
- **Combining components**: All expense components are aggregated by day, summing amounts within each expense category. Operating expenses and token incentives are unioned together to create the complete expenses dataset.
- **Currency conversion**: DAI-denominated expenses are converted to USD using end-of-day price feeds, with DAI defaulting to $1.00 for historical periods before price feed availability. MKR expenses are converted using MKR/USD price feeds.
- **Time aggregation**: All expenses are truncated to daily boundaries using `timestamp_trunc(block_timestamp, day)`. The finalization macro ensures complete daily coverage with zero-filling for missing days.
- **Final calculation**: The metric represents the sum of all expense categories converted to USD: workforce payments + oracle costs + DAI savings rate + direct MKR costs + liquidation losses - returned payments, providing the total daily operational expense for the Sky protocol.

*This methodology was automatically generated by Token Terminal's methodology analyzer.*

Total project operating and incentive expenses.

SkySKY

Expenses

Expenses

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Chain breakdown